Question

Perry made $34,885 this year. If the inflation rate was 6.5 percent, how much was his salary actually worth? (purchasing power)

Answer 1

The salary of Perry if inflation is 6.5 % is $ 32617.475

Solution:

Given that,

Perry made $34,885 this year

The inflation rate was 6.5 percent

To find: Salary worth if inflation rate was 6.5 percent

From given,

Inflation rate = 6.5%

Therefore,

Worth of salary due to inflation = 100 % - 6.5 % = 93.5 %

Money earned in this year by Perry = $ 34, 885

Therefore,

Worth of Perry salary due to inflation = 34,885 x 93.5%

$\text{Worth of Perry salary due to inflation }= 34885 \times \frac{93.5}{100}\\\\\text{Worth of Perry salary due to inflation }= 34885 \times 0.935\\\\\text{Worth of Perry salary due to inflation }= 32617.475$

Thus the salary of Perry if inflation is 6.5 % is $ 32617.475